 "Govt paid Rs 600 cr for idling foreign loans")
The Comptroller and Auditor General (CAG) has said the government took a hit of Rs 600 crore as commitment charges for external loans between 2009-10 and 2014-15 because of inadequate planning.
The CAG also said there was no clarity in the proposal to set up the public debt and management agency (PDMA) despite several statements by the finance minister in Parliament.
"During the period 2009-10 to 2014-15, commitment charges to the extent of Rs 602.66 crore were paid," the CAG said, in its report on public debt management tabled in Parliament. This pointed to inadequate planning for the loans, it added.
Commitment charges are paid on the undrawn balance of external loans. The CAG, however, did not provide a break-up of commitment charges paid by India to multilateral agencies like the World Bank and the Asian Development Bank.
On the PDMA, the report said while some measures had been taken for setting it up, the task force was established in September 2014, six years after the creation of the middle office in the finance ministry.
Finance Minister Arun Jaitley has proposed setting up an independent PDMA to take over the government debt management functions from the Reserve Bank of India. Facing opposition, he removed this proposal from the Finance Bill and said a separate PDMA Bill would be tabled.
The Reserve Bank of India now manages the public debt of the central and state governments. The middle office in the finance ministry formulates long-term debt management, annual debt issuance and borrowing calendars.
The CAG said the finance ministry should consider putting in place a legal framework specifying the objectives of central government borrowing and the public debt management strategy.
“A legal framework, consisting of both the primary and the secondary legislation, may include the definition of public debt, debt management objectives, borrowing purposes and requirement of a debt management strategy,” the report said.
It noted there had been no evaluation of outcomes though the Fiscal Responsibility and Budget Management Act, 2003, required submission of reports that included information on debt management activities.
